Governor Jeff Landry has signed legislation providing long-awaited clarity to Louisiana’s Oilfield Indemnity Act (“LOIA”), giving oil and gas industry stakeholders a clearer framework for contracting around the allocation of risks associated with projects central to Louisiana’s energy economy.

The legislation was sponsored by the Louisiana Oil & Gas Association (“LOGA”) and authored by Lafayette-area State Representative Troy J. Hebert. At LOGA’s request, industry attorneys Robert M. Kallam of Kean Miller and Hal J. Broussard, outside retained counsel for Island Operating Company, Inc., led the effort to assist Representative Hebert in drafting the legislation, working alongside LOGA members and a broad coalition of industry stakeholders — including operators, contractors, insurance brokers and agents, and insurance companies. The bill was introduced on the Senate side by Senator M. Kirk Talbot from River Ridge.

What the Legislation Does

At its core, the new law establishes an express framework governing when additional insured provisions in oilfield contracts are enforceable. A party seeking additional insured coverage — whether for itself alone or for itself and members of its group as defined by its agreement with the named insured — must satisfy each of the following requirements:

1. Submit a written request for an additional insured premium quote by separate written communication to the named insured, the named insured’s insurance agent or broker, or both;
2. Receive a premium quote from the named insured’s insurer or its authorized representative; and
3. Make direct payment to the named insured’s insurer or its authorized representative for either individual or group additional insured coverage.

The amended language further clarifies that additional insured coverage for a group is valid and enforceable only when the premium is expressly quoted for group coverage and the additional insured’s payment corresponds to that group premium amount.

Renewal Notification Requirements

Once additional insured coverage is purchased, the named insured, its insurer, or its authorized representative must notify the additional insured in writing of upcoming renewal. That notice must be provided at least 30 days before the next annual premium is due, or within seven days of binding the renewal coverage — whichever period is shorter. If an additional insured failed to make the initial request or did not make payment in the prior policy year, no renewal notification is required, and the additional insured must submit a new written request for an additional insured premium quote.

Deductibles and Retentions

The amendments also address financial responsibility for deductibles and retentions. Under the new framework, the additional insured — not the named insured — is liable for any applicable deductibles or retentions set forth in the named insured’s policy, up to a maximum of $100,000. The named insured bears responsibility for any deductible or retention amount exceeding that threshold. Any contractual agreement to the contrary is expressly nullified by the amendments, and where such an agreement exists, the additional insured coverage provisions will not apply.

Scope of Application – “Well or Wells”

The legislation also amends the LOIA to add the phrase “or wells” to the existing statutory language defining its scope of application. Prior to this amendment, the statute referenced only “a well” in the singular. The amendment confirms that the number of wells covered by an agreement is immaterial to whether the LOIA applies, and that the statute’s prohibitions apply equally to agreements covering multiple wells.

Scope of Application – “Illustrative Activities”

House Bill 941 further amends the LOIA to clarify that the list of activities falling within the statute’s ambit under Subsection C is “illustrative.” Prior to this amendment, courts were left to determine independently whether that list was illustrative or exhaustive. The amendment confirms that the LOIA’s scope is not restricted to the activities expressly enumerated in Subsection C, but that the list is intended as a guide reflecting the kinds of activities the statute was designed to reach.

Robert Kallam and Thomas Frederick are members of Kean Miller’s Offshore Energy & Marine group in the firm’s Lafayette office. They advise and defend marine, energy, transportation, insurance, and other clients in complex litigation and routinely counsel on contractual risk allocation, indemnity, and insurance issues central to offshore and oilfield operations. Robert played a leading role in drafting the legislation discussed in this post, working alongside industry stakeholders to help shape amendments to Louisiana’s Oilfield Indemnity Act.